January 3, 2019

How to reposition your office building for a higher return

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Investing in commercial real estate as a vehicle to earn income is not a new idea. Most of us know of someone who has invested in real estate and has “struck it rich.” You can invest in multifamily, retail, industrial, land, office space and more, but I’m particularly interested in the office sector. And although the idea of investing isn’t new, there is a variety of new ways for owners to reposition their buildings to create more value.

First impressions mean everything, especially in real estate. Remember, we’re trying to court tenants to sign a lease in our building. Additionally, we’re trying to keep our existing tenants happy so they continue to lease from us. If a tenant drives up to your building and the sidewalks are cracked and the parking lot has potholes and the trees are dying, you better believe they’ll consider going elsewhere. Rather, if you keep up your maintenance and invest in updated exterior signage, they’ll be more willing to walk inside to see what you have to offer. These costs can be returned many times over based on extrinsic value tenants will place on a building that’s in good shape.

Now that we’ve gotten past the exterior, let’s focus on what’s inside. Many suburban office buildings are nearing 30 years old, as much of the stock was built in the mid-to-late 1980s. The lobbies are old and tired and are in need of a major facelift. If you haven’t renovated yet, you should consider new, modern furniture, energy-efficient lighting, new paint, etc. Don’t have a full cafeteria? Consider outsourcing the task to one of a wide variety of grab-and-go food vendors you can work with to provide options. Still have that old tenant directory? Toss it and upgrade to something like a touchscreen that not only tells you the tenant roster but also shows people the local amenities. Here’s another cheap idea: Wi-Fi. Employees like flexible work solutions, so give them the opportunity to work outside of the office.

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